Okay, so I read this chapter Friday or something. (When did I Read it?). Maybe Thursday night. But it clarified a bit.
On the 20% savings it breaks down as follows:
10% Retirement
5% Prepay Mortgage
5% Future Dreams
Oh, if only it were that simple!
For one, 10% retirement seems a bit on the low side to me. Then again if they are saying 10% now, 15% later when mortgage is paid. Then, well, I guess that might make sense. But this was 10% of take-home pay, which makes it even skimpier).
5% future dreams? I guess. I think this is probably good. But I think there should be caveat in there that it also helps cushion your emergency fund, for the unforeseen stuff of life. This is the way I look at my life. Of course I want to save oodles of money for earlier retirement and future dreams. Reality is, something will probably come up. Life would have to go really well for a long time to cash in. But I don't know, maybe it keeps you going to have a dream. But for the most part seems the dreams of your life should come from the wants/needs section. The 30% wants. Why not save some of that for your dreams?
I also did not see any mention of the importance of saving for bigger purchases in this book. That since you are switching to a cash lifestyle, you need to start putting away for your next car, etc. (If this was mentioned I did not see it!). When you look closer at the dreams savings I think that is what it is amounting to. (Cars, college, weddings, etc. - these were examples in the dream section). I just think that the authors do a bit of a disservice painting this savings as "dream savings" when it is most likely going to pay cash for cars, repairs around the house, and orthodontia for your kids. You aren't suddenly going to be paying cash for vacations to Aruba if you save 5% for "dreams" and the rest for retirement. Sure, it will make life easier than it was, if you were in financial hot water. But this part of the book angles a little too much to "get rich quick scheme." You'll never have a money problem again! If you believe that, well, you have bought all the glitz of the book.
But I am glad the savings part was clarified. I was confused on that part in the first few chapters. 20% savings for what? Now I know...
All Your Worth - Savings
December 9th, 2007 at 02:31 pm
December 9th, 2007 at 03:07 pm 1197212854
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December 10th, 2007 at 04:47 am 1197262029